Rental yields also hit 10-year high despite ongoing landlord challenges
Buy-to-let fixed mortgage rates have fallen to their lowest point since September 2022, while the range of available products has reached a record high, according to price comparison site Moneyfactscompare.co.uk.
The average two-year fixed buy-to-let rate now stands at 4.88%, with the average five-year fixed at 5.21%.
Product availability across fixed and variable buy-to-let mortgages has grown to 4,597, the highest number recorded since electronic tracking began in November 2011. There remain more five-year fixed products than two-year options, and the number of deals at 75% and 80% loan-to-value has reached new highs for both two- and five-year terms.
Despite these developments, landlords continue to encounter financial headwinds, and speculation persists regarding further tax changes in the forthcoming Budget.
“Landlords looking to refinance or entering the market may be encouraged to see that buy-to-let rates have dipped to their lowest levels since September 2022, both for either a two- or five-year fixed term,” said Rachel Springall (pictured right), finance expert at Moneyfactscompare.co.uk.
“The cost of finance is a fundamental part of becoming a landlord, as tax changes over the years have led to a more challenging situation for investors to hit desirable profit margins. The speculation on more changes to hit private landlords in the upcoming Budget will also lead to more concerns.
“Those who do not have buy-to-lets held in a limited company could get hit if National Insurance Contributions (NICs) are levied on pre-mortgage profits. Hamptons had previously estimated that a limited company would be the structure of choice for the next generation of investors. The growing number of set-ups will only escalate if the government makes the NICs levy rumour a reality.”
Springall added that the mounting pressure on landlords is stark, as recent figures from UK Finance revealed buy-to-let mortgage repossessions are up by 11% year-on-year.
There are also growing reasons for landlords to seriously consider leaving the market, or to reduce their portfolio. Data from the National Residential Landlords Association indicates that 26% of landlords sold at least one property in 2024, while only 8% made purchases during the same period.
“Landlords leaving the market is a continuous trend and is pushing up rents for tenants due to a growing supply and demand imbalance,” said Megan Eighteen, president of industry body ARLA Propertymark. “Ultimately, it’s positive to see there is a glimmer of hope for those landlords looking to take out a buy-to-let mortgage as they become the most affordable they’ve been in years.
“However, successive governments have placed pressure on many other areas of a landlord’s finances for decades, and with the news of yet another blow for investors due in the upcoming Budget, the future of the private rented sector is concerning.”
Buy-to-let yields reach decade high
Buy-to-let landlords are experiencing their highest average rental yields in 10 years, according to new research from Pegasus Insight. The firm’s latest Landlord Trends report for the second quarter of 2025 indicates that average yields have returned to 6.5%, matching the peak recorded in the third quarter of 2024.
The report highlights regional differences, with landlords in the North West, North East, and East Midlands achieving average yields above 7%. In contrast, London continues to offer the lowest returns, with yields averaging 6.1%.
Profitability remains steady across the sector. The research finds that 87% of landlords are currently making a profit, with 21% describing their profits as ‘large’ and 66% reporting ‘small’ profits. Just 5% of respondents indicated they are operating at a loss. These figures suggest that, despite ongoing regulatory and tax pressures, buy-to-let remains a resilient investment.
“Yields at a 10-year high are a clear signal of the enduring strength of the private rented sector,” said Bethan Cooke (pictured right), director at Pegasus Insight. “Despite the significant challenges landlords have faced over recent years – from higher borrowing costs to shifting tax rules – the fundamentals of tenant demand and income generation remain robust.
“The fact that almost nine in 10 landlords are still making a profit demonstrates the sector’s ability to weather economic and policy storms. At the same time, the policy landscape is far from settled. The Renters’ Rights Bill represents the most significant set of changes in a generation, and while intended to protect tenants, it is also adding to landlord uncertainty.”
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